The firm had closed one of its two operational blast furnaces at Port Kembla, on the east coast of NSW, and its hot-strip mill operations at Western Port when it quit the export market in tough economic conditions.

Voluntary redundancies

BlueScope, the biggest employer on the Mornington Peninsula, said that it would offer voluntary redundancies to workers and set up a job substitution and outplacement services process.

Billy Hassan, who has worked at the Hastings plant since the early 1980s, said workers were given a presentation by management this morning.

"They said that we will be asked to put up our hands for [voluntary] redundancy. And if they don't get enough, they will tap us on the shoulder," said Mr Hassan, a union delegate at the plant.

Mr Hassan said this round of redundancies played out in a similar way as the August 2011 cuts. "We didn't know much about it until it happened," he said.

The steel production plan produces some flat sheeting for car manufacturing, but predominantly supplies to the housing market, including corrugated sheeting.

Mr Hassan said production had reduced towards the end of the year, "but we always slow down at this time of year".

Asked whether the job losses were a result of the Gillard government's carbon tax, Mr Hassan said: "They are not saying much about that [the carbon tax] yet."

'Heart-breaking start to the new year'

Australian Workers' Union Victorian Secretary Cesar Melhem said he was being briefed by BlueScope this morning.

"This looks like a heart-breaking start to the New Year for our members at Western Port," Mr Melhem said in a statement.

Macquarie analyst Liam Farlow said market conditions in Australian residential activity have remained weak, forcing the steel manufacturer to continue its cost-cutting measures.

''This is more of a reorientation of Australian production,'' Mr Farlow said.

''It's just incremental cost savings by the company, which has been struggling with soft-end markets and a high Australian dollar, so it is continually having to focus on where it can pull costs out of the business given the current level of market demand.''

Mr Farlow said BlueScope recently upgraded its metal-coating facilities at Port Kembla to run its next-generation Zincalume steel product.

''The upgrade was completed in late 2012 and it is looking to fully load and utilise the operational facilities at Port Kembla as opposed to the Western Port ones," he said.

Another analyst said BlueScope was not reducing asset capacity but taking shifts off at the Western Port facility, increasing the utilisation of shifts at the Springhill plant in NSW.